KARACHI: Mian Muhammad Mansha, one of the wealthiest individuals in Pakistan, has recommended that the government should impose taxes on the real estate and retail sectors, which have been receiving preferential treatment.
Mansha made this suggestion during the first meeting of a committee that was formed several months ago by Prime Minister Shehbaz Sharif to identify avenues for revenue mobilization.
As per the details, Mansha and Mohammad Ali Tabba, who were the only private-sector members of the committee, argued that sectors that were already heavily taxed should not be burdened with additional taxes.
The committee, which was chaired by Finance Minister Ishaq Dar, also included Special Assistant to the PM (SAPM) on Finance Tariq Bajwa, SAPM on Revenue Tariq Pasha, Reforms and Revenue Mobilisation Commission Chairman Ashfaq Tola, and Federal Board of Revenue (FBR) Chairman Asim Ahmad.
The private committee members recommended that government increase the share of services in tax collection by taking provinces on board.
Meanwhile, the Reforms and Revenue Mobilization Commission is already working on a plan to expand the narrow tax base, which overlaps with the terms of reference of the committee.
The FBR has also been struggling to expand its tax base and is heavily focused on those who are already paying taxes. Despite recent efforts to increase tax collection, the tax-to-GDP ratio remains low at 9%.
Moreover, sales tax collection has been the weakest area for the FBR, and the collection of sales tax amounted to Rs1.7 trillion in the first eight months of the current fiscal year, which is Rs138 billion less than the target.
The shortfall is in relation to the old annual tax target of Rs7.470 trillion, which is now irrelevant after the mini-budget.
Despite a mini-budget and steep currency devaluation, the FBR could not narrow the tax shortfall, which came in at Rs212 billion in the first eight months of the current fiscal year.
Additionally, the salaried class has been adversely affected by the preferential treatment given to the retailers and real estate sector.
The IMF has also failed to bring retailers to the tax net and was satisfied with measures such as the increase in the GST rate from 17% to 18%.
Notably, the PML-N government has traditionally had a soft corner for traders, who are considered its strong supporters. However, the government has been encouraged to tax the real estate sector and ensure that the sector does business only through banking channels.
Govt. is burdening the already stressed sectors by imposing additional taxes in mini and main budgets. Govt. should widen the tax net and cut the 2700 Billion subsidies given annually to business tycoons.